A broken car, a leaking roof on the summer cottage roof, or a crying need for a sun holiday with salty baths. There are many reasons why you need money right away. Fast loans are just fast loans, where the whole process from application to payment goes away. In some cases, the person with a payment note may also be able to borrow, since no credit report is made. It may sound tempting, but there are some things that are extremely important to consider before taking a quick loan.
What is a quick loan?
A fast loan is a fast loan that can be granted and repaid almost as quickly – 30 days is a regular repayment period. Typical examples of fast loans are SMS loans, micro loans, telephone loans and other short-term loans. Fast loans, not least SMS loans, have been talked about and criticized in recent years. The criticism is often due to the fact that people who have not been able to repay the loans on time have taken additional quick loans to pay off the previous loans, which has led to a fall in debt and payment remarks.
What are the differences to private loans?
The interest rate
There are some important differences between fast loans and unsecured loans. Mortgages generally have a higher interest rate than private loans. Sometimes fast loans are offered interest-free, but this usually means that the fees are high. Therefore, be sure to check what fees are available and check the effective interest rate. It is also important to remember that the quick loans usually indicate the interest rate on a monthly basis. For private loans, instead, the interest rate is set annually. Therefore, it is good to recalculate the interest rate of the fast loans to the annual rate for a clearer comparison.
The repayment period also differs, for private loans it can vary between 1-15 years, while a fast loan must be repaid quickly, often within a 30 days. The short repayment period increases the risk of getting into a vicious spiral where you are forced to take out new loans to repay the old loan.
We say you borrow $ 5000 with an SMS-Loan. The repayment period is 30 days. The loan is offered interest-free, but a fee of $ 395 is added. This gives a monthly interest rate of 7.9% (395/5000). If you are going to convert the interest rate to the annual interest rate, you can multiply the monthly interest rate by the number of loan periods per year. There are 12.17 loan periods per year (365/30).
This gives an annual interest rate of 96.12% (7.9 x 12.17). The effective interest rate on the loan will be even higher, it will be 152.21%.
It is an interest rate that is vastly higher than what you can get with a private loan.
Quick loan with direct payment
Quick loans are often able to mean the payout goes just as quickly. Sometimes you have the money in your account within 24 hours. A private loan is also paid off quickly, but you usually have to wait some extra day. When you apply for a private loan from Astro Finance, you have to wait two days after the lender receives your signed loan agreement before the money is in your account.
Why take a quick loan?
If you really need to have the money the same or next day and you absolutely have no other options, a quick loan can solve a temporary need for money. In some cases it is also possible to take quick loans despite payment remarks, which can be a savior in need if all other possibilities are excluded. In some cases, the banks also allow you to take out a quick loan without UC, this to speed up the process as much as possible.
Disadvantages of quick loans
A major disadvantage is that fast loans often become much more expensive than unsecured loans. Although the interest rate may be low, or if the loan is “interest-free,” it is important to pay attention to the fees as well. They may seem low, but since the loan amount is also not very high, the effective interest rate is still high. Also, keep in mind that if you do not repay the loan within the agreed time, it may be even more expensive.
The short repayment period is also a disadvantage. Keep in mind that you will be able to repay the loan within the agreed time. You should definitely not take a quick loan to pay off another fast loan. This is a common debt trap that you should really avoid. If you already have several expensive quick loans, it can instead be smart to collect your loans and credits into a new, cheaper private loan with the help of Astro Finance.
Alternative to quick loans
If it is about small amounts, it may be wise to first ask a good friend or family member if you can borrow money privately from them. You can often get such a loan directly and are often free of interest for real.
If you need to borrow a larger amount of money, unsecured loans are a good alternative. To find your best loan, do your best in comparing the lenders first. Astro Finance is a loan broker that helps you compare the lenders so that you find the best interest rate and loan terms when applying for a private loan. When you decide on a loan that suits you, the lender will pay the money out within two days. A tip for those who want the payment to go as quickly as possible is to sign with BankID – then the lender gets your signature directly and you get the money faster.
Do you have a payment note? Even if you do, we make an effort to find a bank or lender that can offer you a loan. A condition that you have a fixed monthly income of at least $ 10,000.
Benefits of comparing lenders
As you have understood, there are both pros and cons of quick loans. Remember that when you take out a private loan you should compare the lenders first. All lenders specialize in different types of customers. Therefore, it is not possible to say that one specific lender is better than another in advance. That is why it is important to compare different loan offers to find which lender is best for you!
If you, as a private individual, go to several different lenders to compare the terms, they each take credit information on you at UC. This affects your credit rating and can impair your ability to get a really low interest rate. If you choose to compare with Astro Finance, only one credit report is made at UC. The service is completely free of charge and you do not commit to anything when you make a comparison. Instead, Astro Finance gets paid directly by the bank or lender when we can help them get a new satisfied customer.